Executive Summary

The clothing industry in its entirety has experienced a turbulent period since 1988, with UK businesses struggling to combat both a slowdown in consumer demand and an increase in imports.

Many companies in the lingerie and hosiery industry had entered a trend of particularly poor trading by 1995, which some did not survive. According to the fashion industry, however, and certainly reflected in the 1997 London Fashion Week, there is now a definite move away from the austerity of recent years towards a more opulent phase. To many women, lingerie will forever be a commodity item but, with a proliferation of expensive designer lines being introduced, it would seem that there is also a substantial demand for luxury items. Since 1992, the retail market has grown by 20% and by the end of 1996 was worth approaching £1.4bn.

A healthier economy, together with increased optimism and confidence, is encouraging consumer spending at a rate unseen for many years. Indeed, a Consumer Confidence Index survey, prepared by Hamilton Direct Bank in autumn 1997, declared consumer confidence to be sky-high, with retailers looking set to enjoy a bumper Christmas. Since lingerie and hosiery are popular gifts, this bodes well for the industry, particularly in conjunction with a move towards more expensive designer lines.

The strength of the St Michael name within lingerie, most of which is British-made, makes the fortunes of some manufacturers, whose core business is provided by Marks & Spencer, heavily reliant upon the continuing success of the retailing giant. The imminent introduction of the first proprietary brand of underwear into multiples, including Safeway and Tesco, may offer the first real competition in the everyday market. At the same time, Sara Lee is hoping that its Pretty Polly hosiery brand will become the UK's leading lingerie brand, following trends in France.

The slow but sure move away from regarding underwear as purely functional, witnessed in recent years, is a trend which those in the hosiery industry are keen to emulate. In a recent interview in The Grocer magazine, the Managing Director of hosiery brand leader, Pretty Polly, summarised the present position by saying that hosiery is going down the same road lingerie took 5 years ago, becoming a commodity and boring. He says "We've got to bring back the fun... and stop taking ourselves so seriously".

Key Note estimates that retail sales of lingerie will reach nearly £1.8bn by the year 2001.

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